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CR, DEBT CEILING ON COLLISION COURSE – POLITICO’s Manu Raju, Jake Sherman and Carrie Budoff Brown: “Hours after federal agencies shuttered their doors for the first time in nearly two decades, congressional leaders from both parties began to prepare for a protracted budget battle bound to grow more difficult the longer it goes unresolved. Indeed, if the standoff continues to creep toward the Oct. 17 deadline to raise the $16.7 trillion national debt ceiling, the two issues will become intertwined — and potentially intractable. House Republican leaders and top Senate Democrats privately began discussing this increasingly likely possibility Tuesday, but the two sides have yet to engage in any direct negotiations in the acrimonious budget dispute.

-- “This is now all together,” Senate Majority Whip Dick Durbin (D-Ill.) said of the debt limit and the continuing resolution to keep the government funded. Within the next few days, if House Republicans don’t accept a Senate plan to open the government until mid-November, Reid is highly unlikely to accept a budget deal if it does not increase the debt ceiling, Democratic sources said Tuesday. If the House GOP won’t back the Senate’s stopgap plan by later this week, Democrats are prepared to argue that it makes little sense to agree to a short-term spending bill if Congress is forced to resolve another fiscal crisis in just a matter of days. A White House official said Tuesday night that the president could get behind Reid’s strategy. Across the Capitol, House Republicans were quickly coming to a similar conclusion. Republicans were internally weighing including a debt ceiling hike in their demands to convene a House-Senate conference committee to discuss a bill to reopen the government. In the coming days, the GOP leadership is likely to change its rhetoric, with Republicans arguing about government funding and the debt ceiling in the same breath. http://politi.co/15Ig27w

--A new CNN/ORC International Poll shows 56 percent of Americans view it as a “bad thing” if the debt limit was not raised, while 38 percent believe it would be a “good thing” for the nation. Fifty-three percent of those surveyed would blame Republicans on Capitol Hill if the debt ceiling was not increased.

LEW TO CONGRESS: RAISE DEBT CEILING ‘IMMEDIATELY’ – Bloomberg News: “The U.S. has started using final extraordinary measures to avoid a breach of the nation’s debt limit, Treasury Secretary Jacob J. Lew said as he pressed Congress to increase borrowing authority ‘immediately.’ Lew, in a letter addressed to House Speaker John Boehner dated [Monday], repeated that the measures will be exhausted no later than Oct. 17. When that happens, ‘we will be left to meet our country’s commitments at that time with only approximately $30 billion,’ he said, ‘far short of net expenditures on certain days, which can be as high as $60 billion’ … The so-called extraordinary measures used by the Treasury are accounting maneuvers allowing the government to avoid breaching the $16.7 trillion debt ceiling. They include allowing the government to enter into a debt swap with the Federal Financing Bank and the Civil Service Retirement and Disability Fund.” http://bloom.bg/16FnGAn

GOP MODERATES KEY TO ENDING SHUTDOWN? – Mike Memoli and Lisa Mascaro report for the Los Angeles Times: “For most of the last two decades, Republicans such as Rep. Patrick Meehan, who represents a politically competitive district near Philadelphia, have been the odd men out in a House caucus dominated by conservatives such as those aligned with the tea party. But with Congress' deadlock resulting in the first government shutdown in more than 17 years, Meehan and like-minded colleagues may be the ones who decide how — and when — the standoff ends. ‘This whole Congress has been on Cruz control for the last two or three weeks,’ said Meehan, referring to Sen. Ted Cruz (R-Texas), a tea party favorite. ‘To a certain extent, you have to let some air out of the balloon.’

--“No matter how legislative standoffs start, they almost always end the same way: One side or the other suffers defections that force its leadership to back down. In any such fight, each side tries to find fault lines in the other's support and see whether pressure can break those fissures open … Democrats have hoped to divide suburban moderates such as Meehan from hard-line conservatives, who have repeatedly tried to tie money for government agencies to measures aimed at delaying or dismantling President Obama's healthcare law. On Tuesday, as the shutdown took hold and more Republicans questioned their party's strategy, the gaps on the GOP side were clearly widening. But the party's less conservative members have shown little willingness in the past to fight the right wing. Whether they will now could determine how long the shutdown lasts.” http://lat.ms/18rjG3C

HOUSE REPUBLICANS CALL FOR CLEAN CR – The Huffington Post is rounding up House GOP members who want to vote for a government funding bill with no Obamacare strings attached. On their list: Pat Meehan of Pennsylvania, Scott Rigell of Virginia, Jon Runyan of New Jersey, Mike Fitzpatrick of Pennsylvania, Lou Barletta of Pennsylvania, Peter King of New York, Devin Nunes of California, Charlie Dent of Pennsylvania, Frank Wolf of Virginia, Michael Grimm of New York, Erik Paulsen of Minnesota, Rob Wittman of Virginia, and Frank LoBiondo of New Jersey. http://huff.to/1dUHW05

--And another roundup of lawmakers – this one via the New York Times, a list of 20 House conservatives who have been relentless in their push to shred Obamacare through the government funding bill: http://nyti.ms/GzOPrT

THE ROGERS REPORT – POLITICO’s David Rogers on how the House GOP’s piecemeal funding bill strategy is not gaining any traction: “The government shutdown fight in Congress took a new ugly turn Tuesday night as Republicans on the House Appropriations Committee bowed to their party leaders and took piecemeal bills to the floor under procedures designed to deny their Democratic colleagues any input. The result was a partisan slugfest and dramatic illustration of how much the committee has been reduced to being a political tool for Majority Leader Eric Cantor (R-Va.) and Speaker John Boehner (R-Ohio). In rapid succession, three bills covering the national parks, District of Columbia, and veterans’ programs were called up under an expedited process known as ‘suspension of the rules.’ Debate was limited to 20 minutes on each side and no amendments permitted before an up-or-down vote on passage.

--“All three bills fell short of the two-thirds majority required, as Democrats held firm behind a leadership rooted strongly in the Appropriations Committee. Top staffers were kicked out of an earlier meeting on the issue, and leaders emerged solid in their opposition to the GOP’s tactics. ‘It’s pathetic,’ said Minority Leader Nancy Pelosi (D-Calif.). ‘It’s beneath the dignity. I keep saying that but we keep getting further beneath the dignity of what our responsibilities are in this House.’ Undeterred, Cantor was already announcing to television cameras a new effort Wednesday calling up funding for the National Institutes of Health. He and other Republicans accused Democrats of voting against Americans ‘hurting’ under the shutdown. Democrats countered that the GOP was playing political games, releasing ‘one hostage’ at a time from the impasse it had helped to provoke over government funding.” http://politi.co/15KNwge

*** A message from the Alliance for American Manufacturing: The American factory is more than just a popular backdrop for campaign speeches and political ads. It’s time for Congress to truly support “Made in America” policies. When Congress tackles tax reform, American manufacturing must be front and center. Learn more at http://americanmanufacturing.org.

HAPPY WEDNESDAY MORNING, OCT. 2, 2013, and welcome to The Huddle, your-play-play preview of all the action on Capitol Hill. It’s been a pleasure serving as your interim host while Scott Wong is away, and starting tomorrow, my esteemed colleague Ginger Gibson will be taking over your favorite daily congressional newsletter. You can send tips, scoops, complaints, corrections, and advice on surviving furloughs to Ginger at ggibson@politico.com.

My new followers include @yonghokim and @Shaina_Shainala.

TODAY IN CONGRESS – The House is in at 10 a.m. and is expected to vote around 1:30 to 2:30 p.m. and again at 5:30 to 6:30 p.m. on government funding legislation. The Senate will be in session at 10:30 a.m.

NOW LIVE: PRO AGRICULTURE - DON'T MISS OUT!: The second of three new POLITICO Pro policy sections is officially live! Pro Agriculture offers subscribers access to high-impact, high-velocity coverage of agriculture, delivering exclusive real-time news and analysis and an early-bird edition of Morning Agriculture — giving you the edge you need to do your job. Interested? Email info@politicopro.com or call (703) 341-4600.

SENATE DEMS’ RISKY CR BET? – Burgess Everett reports for POLITICO: “Democrats successfully avoided being blamed for shutdowns in the mid-’90s, but that record could easily change if a prolonged and economically damaging closure prompts public outrage at everyone in Congress, not just Republicans. Democrats are showing no signs of backing down, transforming the Senate into a brick wall that blocks repeated volleys of legislation from the Republican-controlled House. There will be no piecemeal spending bills, no compromise on Obamacare and no last-minute budget conference … Conventional wisdom is that the public will blame Republicans for a shutdown, but even at this early stage, it’s not a slam-dunk.”

--“’This is a failure and no one looks good. But clearly, it’s a House Republican shutdown,’ said Sen. Ben Cardin (D-Md.). ‘There’s an understanding that people aren’t happy. It’s not good for anyone.’ … [Independent Sen. Angus King of Maine, who caucuses with Democrats, said:] ‘It’s very hard not to be tarred. I’m hearing from Maine: ‘Why aren’t you fixing this?’ You know, I’d like to fix it. But I don’t want to fix it at the price of establishing a precedent that this is the way we are going to legislate.’” http://politi.co/15IfzCm

BOEHNER’S PRIVATE FIGHT FOR HEALTH SUBSIDIES – John Bresnahan with the must-read for POLITICO: “With the federal government nearing shutdown, House Speaker John Boehner stood on the House floor Monday and called on his colleagues to vote for a bill banning a ‘so-called exemption’ that lawmakers and staffers receive for their health insurance. ‘Why don’t we make sure that every American is treated just like we are?’ Boehner asked, seeking to prohibit members of Congress and Capitol Hill aides from getting thousands of dollars in subsidies for their health insurance as they join Obamacare-mandated insurance exchanges. Yet behind-the-scenes, Boehner and his aides worked for months with Senate Majority Leader Harry Reid (D-Nev.), House Minority Whip Steny Hoyer (D-Md.), and others, to save these very same, long-standing subsidies, according to documents and e-mails provided to POLITICO. Senate Minority Leader Mitch McConnell (R-Ky.) was also aware of these discussions, the documents show.”

--“During a five-month period stretching from February to July, Boehner and his aides sought along with Reid’s office to solve what had become a big headache for both of them. They drafted and reviewed a possible legislative fix, as well as continued to push for an administrative one from the Office of Personnel Management. Boehner aides insist there was never any intention to move legislation through the House to correct the problem. McConnell was also opposed to any legislation approach to the controversy, said spokesman Don Stewart.” http://politi.co/1dVL7os

HOUSE DEMS TO INTRODUCE IMMIGRATION REFORM BILL – POLITICO’s Seung Min Kim reports: “Key Democratic lawmakers in the chamber — including Nancy Pelosi, the top House Democrat; Xavier Becerra of California, and Congressional Hispanic Caucus chairman Ruben Hinojosa — have been working on a comprehensive piece of legislation in recent weeks. In writing their bill, House Democrats are taking the Senate Gang of Eight bill, but erasing controversial border-security provisions known as the Corker-Hoeven amendment. In its place, Democrats are inserting a bipartisan border-security bill that passed the House Homeland Security Committee in May … The New Democrat Coalition — a group of more moderate lawmakers in the caucus — are expected to play a major role with the House Democrats’ immigration strategy. Another congressional aide said Tuesday that New Democrats such as Joe Garcia of Florida, Suzan DelBene of Washington, Joaquin Castro of Texas and Jared Polis of Colorado will help lead the effort.” http://politi.co/18O33Ow

NRCC HITS DEMS ON OBAMACARE – The House Republicans’ campaign arm is out this morning with radio ads whacking House Dems over their vote against the GOP funding bill that include a cancellation of health care subsidies for lawmakers, aides and administration officials. One ad, targeting, Rep. Ann Kirkpatrick (D-Ariz.), says: “How out-of-touch is Ann Kirkpatrick with Arizona families? So out-of-touch that she voted to shut down the government in order to protect Congress’ taxpayer funded healthcare. While Washington forces ObamaCare on Arizona families, Kirkpatrick votes to give herself a break … Washington is broken and its clear Kirkpatrick is part of the problem.”

PETER KING: 30-40 REPUBLICANS WON’T ADMIT OBAMA IS PRESIDENT – The Hill: “Rep. Peter King (R-N.Y.) said Tuesday that there are about 30 to 40 Republicans in Congress who refuse to recognize the legitimacy of Obama’s presidency and are seeking to erase everything that’s happened during his administration. King made the remarks in a discussion with Chris Matthews on MSNBC’s Hardball, after the host asked how many Republicans would like to ‘erase [Obama’s] record as if he was never here.’ ‘I’ve had members, they know who they are, they say – ‘I really can’t say with these lips that this man, Barack Obama, was elected president’,’ Matthews said. ‘They choke on that. How many are there in Congress on your side that represent that rejectionist front?’

--“’I would say there are probably 30 or 40 who are like that,’ King responded. ‘As there were a number of Democrats who felt that way about George W. Bush, and going back to when you and I first met, Republicans who felt that way about Bill Clinton.’” http://bit.ly/17233Zs

TUESDAY’S TRIVIA WINNER – Ari Mittleman, a former aide to Sen. Bob Casey (D-Pa.), was the first – and only – reader to correctly list three Pennsylvania House members who were car salesmen before coming to Congress: Don Sherwood, Bill Shuster and Mike Kelly.

TODAY’S TRIVIA – Ari has today’s question: Montenegro, a NATO aspirant and U.S. ally, is the world's second youngest country. How many sitting members of Congress have visited the nation since its 2006 independence? The first person to correctly answer gets a mention in the next day's Huddle. Email me at skim@politico.com.

GET HUDDLE emailed to your Blackberry, iPhone or other mobile device each morning. Just enter your email address where it says “Sign Up.” http://www.politico.com/huddle/

***A message from the Alliance for American Manufacturing: When workers and businesses speak with one voice, Congress should listen. And when the American people want to see more products stamped with “Made in America,” public policy should make that possible. Congress can support “Made in America” by ensuring the tax code spurs job creation in America, not by shifting more of the tax burden to domestic producers who face steep competition from overseas. Wall Street was bailed out five years ago, but most Americans still feel left behind. Don’t give more to Wall Street by taking away Main Street’s lifeline. Learn more at http://americanmanufacturing.org.